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The U.S. job market is finally showing signs of life, but
small-business hiring is down
slightly, according to several reports released this week.

The economy
added 165,000 jobs in April, and the unemployment rate ticked
down slightly to 7.5 percent, the U.S. Bureau of Labor Statistics
reported today.

The job growth and unemployment rate were both slightly better
than economists had predicted and an improvement from the
previous month. In March, a revised 138,000 jobs were added and
unemployment stood at 7.6 percent.

Unemployment has been dropping for the past several months, but
previous reports showed that people were leaving the workforce
rather than finding jobs. This month, however, the decline in the
unemployment rate is a sign of a stronger job market.

"Today's report is pretty good news," says David W. Berson, chief
economist at financial services company Nationwide Insurance. "It
[shows] stronger job growth, not declines in the labor force as
it has over the last six months."

In another sign of economic improvement, the employment data for
February and March were revised upward. In those months, 114,000
more jobs were added than previously reported, suggesting that
the job market in 2013 is somewhat stronger than people thought,
says Berson. What's more, a Labor Department report on Thursday
revealed that first-time claims for unemployment benefits slid to
their lowest level in five years, indicating fewer layoffs.

To be sure, economists aren't breaking out the champagne yet. The
job numbers are considered good but not great, and unemployment
is still higher than forecasters would like.

Meanwhile, hiring among small-business owners is not keeping pace
with the national average. On Wednesday, payroll processor ADP
released a private-sector jobs report showing that small businesses added
50,000 jobs in April, compared with 60,000 in March. And a
report this week by online payment
processor SurePayroll showed that hiring fell 0.2 percent in
April from the previous month at companies with an average of
eight employees.

It appears that the impending health-care reform may be
negatively impacting hiring at companies around the 50-employee
threshold. The slowdown in small-business hiring is coming
primarily from the leisure and hospitality, retail trade and
construction sectors, according to ADP. These are industries
where one would expect the effects of health-care reform to be
more significant, says Mark Zandi, chief economist of Moody's
Analytics. Under the Affordable Care Act legislation, known as
Obamacare, companies with more than 50 staffers have to provide
health-care insurance to workers or face substantial fines.

Higher payroll taxes and government spending cuts may also be
taking a toll on small-business hiring. In January, the payroll
tax increased to 6.2 percent after two years at 4.2 percent,
taking a larger chunk out of workers' take-home pay. What's more,
industry observers say uncertainty surrounding the automatic
federal budget cuts, known as the sequester, is likely having
some effect.